Core Insights - The basic chemical industry experienced a decline of 0.95% during the week of September 22-28, ranking 17th among 31 primary industries in the Shenwan index [1][3] - The oil and petrochemical industry saw a smaller decline of 0.12%, ranking 10th in the same index [1][3] - In terms of product prices, out of 100 tracked chemical products, 25 saw price increases, 43 experienced declines, and 32 remained stable [1][3] Industry Dynamics - The average price of 34% of tracked products increased month-on-month, while 52% decreased, and 14% remained unchanged [1][3] - The top gainers in weekly average prices included liquid ammonia, anhydrous hydrofluoric acid, and aniline, while the largest decliners included sulfuric acid and vitamin E [3] - International oil prices rose, with WTI crude futures closing at $65.72 per barrel (up 4.85%) and Brent crude at $70.13 per barrel (up 5.17%) [4] - U.S. crude oil production averaged 13.50 million barrels per day, an increase of 30,100 barrels compared to the same week last year [4] - Natural gas futures closed at $2.84 per mmbtu, with a weekly decline of 1.73% [5] Price Trends - Vitamin prices have been declining due to weak downstream demand, with vitamin A averaging 60 yuan/kg (down 1.64% week-on-week) and vitamin E at 46 yuan/kg (down 7.07%) [6] - Nylon prices also fell, with PA6 chip prices averaging 9,325 yuan/ton (down 2.36% week-on-week) [7] Investment Recommendations - As of September 28, the price-to-earnings ratio for the basic chemical sector was 25.20, while the oil and petrochemical sector stood at 11.52 [8] - Suggested areas of focus include the impact of "anti-involution" on supply, the importance of self-sufficiency in electronic materials, undervalued industry leaders, and stable dividend policies in energy companies [2][9] - Long-term investment themes include the sustained high prices of crude oil, the growth of new materials, and the recovery of demand supported by policy initiatives [9]

Investment Rating - The report rates the chemical industry as "Outperform" [2] Core Views - The report highlights the impact of rising international oil prices and the decline in prices of vitamins and nylon [2] - Key areas of focus for September include the effects of "anti-involution" on supply in related sub-industries, the importance of self-sufficiency in electronic materials companies, undervalued industry leaders, and stable dividend policies in energy companies [2][12] Industry Dynamics - The basic chemical industry experienced a decline of 0.95% in the week of September 22-28, ranking 17th among 31 primary industries [9] - The oil and petrochemical industry saw a smaller decline of 0.12%, ranking 10th [9] - Among 100 tracked chemical products, 25 saw price increases, 43 saw declines, and 32 remained stable [9] - The average price of 34% of products increased month-on-month, while 52% decreased [9] - The report notes significant fluctuations in the prices of various chemicals, with liquid ammonia and anhydrous hydrofluoric acid showing notable price increases [9] Price Trends - International oil prices rose, with WTI crude futures closing at $65.72 per barrel, a weekly increase of 4.85%, and Brent crude at $70.13 per barrel, up 5.17% [9] - The report indicates a potential for oil prices to remain high due to geopolitical risks and OPEC+ interventions, despite pressures from tariff policies and increased production [9] - The report also notes a decline in vitamin prices due to weak downstream demand, with vitamin A and E prices dropping significantly compared to last year [9][12] Investment Recommendations - The report suggests focusing on companies in the oil and gas sector, particularly those with stable dividend policies and strong performance in the upstream capital expenditure [12] - It recommends monitoring developments in new materials, especially in electronic materials and renewable energy sectors, which are expected to see significant growth [12] - Specific companies recommended for investment include China Petroleum, China Oilfield Services, and several technology firms in the semiconductor and electronic materials sectors [12]

Investment Rating - The report maintains an "Overweight" rating for the petrochemical and basic chemical sectors [6]. Core Insights - The petrochemical industry is expected to experience a recovery in prosperity due to the implementation of the "Stabilization Growth Work Plan" for 2025-2026, which aims to enhance high-end supply and optimize capacity in various sub-sectors [1][2]. - The report highlights the importance of controlling new capacity for key products such as refining, ethylene, PX, and coal-to-methanol, which is anticipated to improve the supply structure [2]. - The focus on fertilizer production stability and the development of new types of fertilizers is expected to continue, with recommendations for companies in this sector [3]. - The report emphasizes the acceleration of new materials and emerging technologies in the chemical industry, driven by policy support for high-end supply and digital transformation [4]. Summary by Sections Section 1: Industry Growth Policies - The Ministry of Industry and Information Technology and other departments have issued a plan to stabilize growth in the petrochemical industry, focusing on high-end supply and project management [1]. - The plan includes measures to enhance supply optimization and support the development of high-end chemical materials in electronics, new energy, and medical equipment [1]. Section 2: Capacity Control and Supply Optimization - The plan specifies strict control over new refining capacity and reasonable planning for the addition of ethylene, PX, and coal-to-methanol capacities, supporting the replacement and upgrading of old facilities [2]. - In 2024, China's refining, PX, and methanol capacities are projected to decrease by 1%, remain unchanged, and increase by 2% respectively, indicating a significant slowdown in capacity growth [2]. Section 3: Fertilizer Production Stability - The plan aims to optimize the production management of key fertilizer companies and ensure stable raw material supply through long-term contracts [3]. - The report notes that the prices of some upstream raw materials have risen significantly, which may impact fertilizer production [3]. Section 4: Development of New Materials and Technologies - The report anticipates accelerated development of high-end chemical materials and emerging technologies, including carbon capture and green ammonia applications [4]. - It encourages the development of new materials in sectors such as integrated circuits, new energy, and medical devices, with a focus on innovation and domestic substitution [4]. Section 5: Company Recommendations - The report recommends several companies based on their potential to benefit from the outlined policies, including: - **Buy**: Yun Tianhua, Dongcai Technology, Hualu Hengsheng, and Luxi Chemical [7]. - **Overweight**: Hengli Petrochemical, Huayi Group, Tongkun Co., Guangwei Composite, Xinfeng Group, and Wanwei High-tech [7].

Investment Rating - The report maintains a positive outlook on the petrochemical industry, indicating a recovery in industry prosperity [3][5]. Core Viewpoints - The "Petrochemical Industry Steady Growth Work Plan" aims for an average annual growth of over 5% in the industry's added value from 2025 to 2026, with a focus on stabilizing economic benefits and enhancing technological innovation [4][5]. - The report highlights five key initiatives to achieve these goals, including strengthening technological innovation, expanding effective investment, and enhancing market demand [6][10]. - The upstream sector is experiencing a trend of widening supply and demand, with expectations of oil prices maintaining a medium to high level despite potential downward adjustments [4][18]. - The refining sector is seeing improved profitability due to a recovery in oil prices, although the current product price differentials remain low [4][45]. - The polyester sector shows signs of recovery, with expectations for improved profitability as supply and demand conditions improve [14]. Summary by Sections Upstream Sector - Brent crude oil prices increased to $70.13 per barrel, a 5.17% rise week-on-week, while WTI prices rose to $65.72 per barrel, up 4.85% [4][18]. - U.S. commercial crude oil inventories decreased to 415 million barrels, down 610,000 barrels from the previous week, and are 4% lower than the five-year average [20][22]. - The number of U.S. drilling rigs increased to 549, up 7 rigs week-on-week, but down 38 rigs year-on-year [28]. Refining Sector - The Singapore refining margin for major products fell to $13.54 per barrel, down $4.51 from the previous week [4]. - The report notes that while refining product price differentials have improved, they remain at low levels, with expectations for gradual improvement as the economy recovers [4][45]. Polyester Sector - PTA prices have stabilized, with the average price in East China at 4528.6 CNY per ton, down 1.69% week-on-week [4]. - The report anticipates a gradual improvement in the polyester industry as new capacity additions taper off in the coming years [14]. Investment Recommendations - The report recommends focusing on leading companies in the polyester sector, such as Tongkun Co. and Wankai New Materials, as well as high-quality refining companies like Hengli Petrochemical and Sinopec [14][15]. - It also suggests monitoring companies in the upstream exploration and development sector, which are expected to maintain high profitability due to sustained capital expenditures [14].

Investment Rating - The report maintains a "Positive" rating for the chemical industry [5][6][20] Core Insights - The petrochemical industry is expected to see stable growth due to the introduction of policies aimed at enhancing industry health and eliminating outdated capacity [5][6] - The demand for viscose filament is anticipated to tighten, leading to an upward trend in prices, while the grass herbicide market is expected to optimize its structure [5][6] - The global GDP growth is projected to remain at 2.8%, with stable oil demand despite some slowdown due to tariff policies [5][6] Industry Dynamics - Oil supply is expected to increase significantly, driven by non-OPEC production, while demand remains stable [5][6] - The coal market is anticipated to experience long-term price stabilization, with easing pressures on downstream sectors [5][6] - Natural gas exports from the U.S. are likely to accelerate, potentially lowering import costs [5][6] Chemical Sector Analysis - The report highlights that the viscose filament industry will see a supply-demand tightening, with a projected increase in operating rates from 84% to over 95% [5][6] - The grass herbicide market is set to address issues of low pricing and quality through upcoming industry meetings aimed at regulating competition [5][6] Investment Recommendations - The report suggests focusing on sectors benefiting from the "anti-involution" policy, including textiles, agriculture, and export-related chemicals [5][6] - Specific companies to watch include Xinxiang Chemical Fiber, Jilin Chemical Fiber, and Lier Chemical, which are expected to benefit from market dynamics [5][6][20] Key Company Valuations - The report provides a valuation table for key companies, indicating various ratings such as "Buy" and "Increase" for companies like Hailir Chemical, Yunnan Chemical, and Wanhu Chemical [20]

Investment Rating - The industry investment rating is "Positive" as the industry index is expected to outperform the benchmark [148]. Core Insights - The report highlights that domestic and international refining project price differentials have shown a decline, with domestic key refining project price differential at 2338.86 CNY/ton, down by 1.52% week-on-week, while the international price differential is at 1062.71 CNY/ton, down by 9.32% [2][3]. - Brent crude oil average price for the week ending September 26, 2025, was 68.03 USD/barrel, reflecting a slight increase of 0.71% [2][3]. - The report indicates that the refining sector is facing mixed signals, with international oil prices experiencing volatility due to geopolitical factors and economic data from the US raising concerns about demand [2][14]. - In the chemical sector, prices for petrochemical products have generally weakened, with price differentials narrowing across various products [2][46]. - The polyester and nylon sectors are experiencing price declines, with polyester filament factories slightly reducing production while facing weak demand [2][81][115]. Summary by Sections Refining Sector - The report notes fluctuations in oil prices, with Brent and WTI prices increasing by 3.45 and 3.04 USD/barrel respectively from the previous week [14]. - Domestic diesel and gasoline prices have slightly decreased, with average prices at 6905.29 CNY/ton and 7995.14 CNY/ton respectively [14]. Chemical Sector - Polyethylene prices have shown slight declines, with LDPE, LLDPE, and HDPE averaging 9685.71 CNY/ton, 7148.00 CNY/ton, and 8000.00 CNY/ton respectively [53][66]. - The report indicates that the MMA market is showing price stability due to limited supply pressure, with MMA averaging 10242.86 CNY/ton [66]. Polyester & Nylon Sector - PX prices have decreased, with the current average at 5757.10 CNY/ton, while PTA prices are also down to 4537.86 CNY/ton [81][96]. - The report highlights that the demand for polyester filament remains weak, with production adjustments being made in response to inventory levels [81][123]. Market Performance - The report tracks the stock performance of six major refining companies, noting significant weekly changes, with Rongsheng Petrochemical up by 4.55% and Dongfang Shenghong down by 3.32% [134][135]. - The overall performance of the refining index has increased by 44.48% since September 4, 2017, outperforming both the oil and petrochemical industry indices [137].

Core Viewpoint - The Shanghai Composite Index fell by 0.65% on September 26, with the oil and petrochemical sector leading the gains, increasing by 1.17% [1] Industry Summary - The oil and petrochemical sector saw a net inflow of 78.76 million yuan, with 32 out of 47 stocks in the sector rising [1] - The top three stocks with the highest net inflow were Hengyi Petrochemical (67.72 million yuan), China Petroleum (67.71 million yuan), and Hengli Petrochemical (46.23 million yuan) [1] - The sectors with the largest declines were computer and electronics, with decreases of 3.26% and 2.75% respectively [1] Company Summary - Hengyi Petrochemical experienced a significant increase of 6.89% with a turnover rate of 2.00% and a net inflow of 67.72 million yuan [1] - China Petroleum rose by 0.25% with a turnover rate of 0.07% and a net inflow of 67.71 million yuan [1] - Hengli Petrochemical increased by 3.48% with a turnover rate of 0.67% and a net inflow of 46.23 million yuan [1] - The companies with the largest net outflows included Tongkun Co. (10.3 million yuan), Donghua Energy (35.13 million yuan), and Rongsheng Petrochemical (26.22 million yuan) [1][2]

Group 1 - The chemical sector experienced a significant increase on September 26, with the Chemical ETF (516020) showing a maximum intraday gain of 1.36% and closing up 0.82%, indicating a potential upward trend [1][3] - Key stocks in the petrochemical sector saw substantial gains, with Xin Fengming hitting the daily limit, Hengyi Petrochemical rising over 8%, Tongkun Co. increasing over 7%, and Rongsheng Petrochemical up over 4% [1][3] - The fundamentals of the chemical industry are improving, with low valuation leading to investment opportunities in both established leaders and high-growth emerging sectors [1][4] Group 2 - The demand side is expected to expand due to the steady implementation of fiscal and monetary policies, as well as "new" policies, which will optimize the supply-demand dynamics in the chemical industry [3][4] - As of September 25, the price-to-book ratio of the Chemical ETF (516020) was 2.21, placing it at a low point within the last decade, highlighting its long-term investment value [3][4] - The chemical industry is anticipated to see a recovery in profitability, with core assets entering a long-term value zone, suggesting a potential for both valuation and profit recovery [4][5] Group 3 - The chemical ETF (516020) tracks the CSI Sub-Industry Chemical Index, covering various sub-sectors, with nearly 50% of its holdings in large-cap leading stocks, providing a strong investment opportunity [4][5] - The industry is expected to benefit from a slowdown in global capacity expansion, which could enhance cash flow and dividend yields for Chinese chemical companies [4][5]

Market Overview - On September 25, the refining and trading sector rose by 0.05% compared to the previous trading day, with Donghua Energy leading the gains [1] - The Shanghai Composite Index closed at 3853.3, down 0.01%, while the Shenzhen Component Index closed at 13445.9, up 0.67% [1] Stock Performance - Key stocks in the refining and trading sector showed varied performance: - Donghua Energy (002221) closed at 9.10, up 5.45% with a trading volume of 480,700 shares and a turnover of 427 million yuan [1] - Rongsheng Petrochemical (002493) closed at 9.42, up 1.51% with a trading volume of 255,000 shares and a turnover of 240 million yuan [1] - China Petroleum (601857) closed at 8.14, up 0.12% with a trading volume of 1,011,100 shares and a turnover of 823 million yuan [1] - China Petrochemical (600028) closed at 5.35, down 0.19% with a trading volume of 894,600 shares and a turnover of 478 million yuan [1] Capital Flow - The refining and trading sector experienced a net outflow of 109 million yuan from institutional investors, while retail investors saw a net inflow of 1.1 million yuan [2] - The capital flow for key stocks indicated mixed trends, with some stocks attracting significant retail interest despite overall outflows [3]

Core Viewpoint - The petrochemical industry in China is entering a concentrated production period from 2019 to 2025, with average capacity growth exceeding 10% per year, leading to increased competition and declining operating rates/profits, yet apparent consumption of key petrochemical products is expected to grow rapidly during this phase [1] Group 1: Industry Trends - The petrochemical sector is experiencing a significant expansion in capacity, particularly in refining, ethylene, PX, methanol, and refining by-products, driven by policy [1] - The export of chemical products is shifting towards quantity over price, with a notable decline in price indices across various sectors, while export volumes for plastics, rubber, and automotive products are expected to maintain growth rates above 10% from 2023 to 2025 [3] - Domestic self-sufficiency rates for key petrochemical products have significantly improved, with ethylene and PX self-sufficiency rates increasing by 19% and 18%, respectively, which corresponds to the absorption of 949,000 and 855,000 tons of capacity [4] Group 2: Demand Dynamics - The development of new industries and emerging consumer markets in China is driving demand for chemical products, particularly in the new energy vehicle and wind power sectors, leading to increased demand for EVA, POE, epoxy resins, and PVDF [5] - The overall domestic demand remains moderate, but structural highlights are evident, with traditional plastics benefiting from the rise of e-commerce and delivery services [5] - The integration, scaling, and intensification of domestic industrial chains are establishing comparative advantages, while the economic growth in ASEAN and Africa is expected to create rapid growth opportunities for chemical demand [5] Group 3: Export Opportunities - The expansion of production capacity is leading to a significant increase in exports, particularly to emerging markets in ASEAN and Africa, as well as a decline in competitiveness from Europe and Japan, which is resulting in a trend reversal for Chinese chemical exports [4] - The CAGR for exports of styrene, PP, PTA, EVA, PA6, and PVC is projected to exceed 40% from 2020 to 2024, with other monitored products also showing growth rates between 9% and 40% [4]